Correlation Between Reacap Financial and Misr Hotels
Can any of the company-specific risk be diversified away by investing in both Reacap Financial and Misr Hotels at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Reacap Financial and Misr Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reacap Financial Investments and Misr Hotels, you can compare the effects of market volatilities on Reacap Financial and Misr Hotels and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Reacap Financial with a short position of Misr Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reacap Financial and Misr Hotels.
Diversification Opportunities for Reacap Financial and Misr Hotels
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reacap and Misr is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Misr Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Misr Hotels and Reacap Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Reacap Financial Investments are associated (or correlated) with Misr Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Misr Hotels has no effect on the direction of Reacap Financial i.e., Reacap Financial and Misr Hotels go up and down completely randomly.
Pair Corralation between Reacap Financial and Misr Hotels
Assuming the 90 days trading horizon Reacap Financial Investments is expected to generate 0.71 times more return on investment than Misr Hotels. However, Reacap Financial Investments is 1.42 times less risky than Misr Hotels. It trades about 0.04 of its potential returns per unit of risk. Misr Hotels is currently generating about -0.02 per unit of risk. If you would invest 684.00 in Reacap Financial Investments on December 5, 2024 and sell it today you would earn a total of 16.00 from holding Reacap Financial Investments or generate 2.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Reacap Financial Investments vs. Misr Hotels
Performance |
Timeline |
Reacap Financial Inv |
Misr Hotels |
Reacap Financial and Misr Hotels Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Reacap Financial and Misr Hotels
The main advantage of trading using opposite Reacap Financial and Misr Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial position performs unexpectedly, Misr Hotels can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Misr Hotels will offset losses from the drop in Misr Hotels' long position.Reacap Financial vs. Atlas For Investment | Reacap Financial vs. Mohandes Insurance | Reacap Financial vs. Assiut Islamic Trading | Reacap Financial vs. Egyptian Financial Industrial |
Misr Hotels vs. Grand Investment Capital | Misr Hotels vs. Saudi Egyptian Investment | Misr Hotels vs. Cairo For Investment | Misr Hotels vs. El Ahli Investment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Correlations module to find global opportunities by holding instruments from different markets.
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